HomeMy WebLinkAbout1973-02-15 Min - Board FEBRUARY 15 , 1973
The special meeting of the Board of Directors of the Truckee-Donner
Public Utility District was called to order by Roy Waters at 7:30
p. m. in the conference room.
ROLL CALL: H. Loehr, present; D. Anderson, present; N. Stone, present;
R. Anderson, absent; R. Waters, present,,
GUESTS PRESENT: Royna Craig, Robert Sutton, Mrs. Edmonds, Kathy Radke.
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EMPLOYEES PRESENT: Cattan; Paulus, Hicks
SIERRA PACIFIC POWER LEASE AGREEMENT
R. Waters: You have before you an agreement of lease which was pre-
sented by the Sierra Pacific Power Company today. So lets bring up
the discussion of it. I know none of you have had a chance to. . .
H. Loehr: Could we have somebody read it?
G. Cattan: It is 26 pages.
R. Waters: It is 26 pages, Henry.
H. Loehr: I know, but if you are going to, go through it that way;
how are you going to go through?
R. Waters : Well. . .
'~ H. Loehr: Or do you want to just refer and let us study it?
R. Waters : I would suggest you have a chance to study this. You have
another five days to study it. I would like to have a copy of this go
to our attorney, Mr. Chamberlain.
G. Cattan: We already have mailed one this morning. We got them at
11: 00 o'clock.
R. Waters: I haven' t had a chance to look at it. I just looked at it
when I came in here tonight. So I would suggest that we can talk over
whatever you want on this as far as it goes.
D. Anderson: Our CPA' s seem to have tried to give us some direction
and recommendation but apparently they weren' t able to because they
didn' t have enough information. How about we try to make the infor-
mation available to them or have some of their questions answered so
that we can get a statement from them.
R. Waters: You mean Central Valley' s project?
D. Anderson: Our Certified Public Accountamts - I don' t know how to
pronounce these names: Semenza, Kottinger, and McMullen.
N. Stone: Oh, the auditors.
D. Anderson: Yes , they provided us with a nice letter that was very. . .
T. Paulus: Well, they should have a copy of this (lease agreement) ;
of course we just got it today.
D. Anderson: How about we give them this and try to answer any of the
other questions they had.
Page 38
SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . . page 2. . . . continued
T. Paulus: They did have this (first S.P.P. C. proposal) , which is
essentially the same.
R. Waters: I guess that is a good idea there.
G. Cattan: Do you have any questions?
D. Anderson: There are some questions here that they don' t know the
answers to and I am not sure if I do either. They ask a number of
questions; they ask ten different questions. I don' t think we have to
go over them; you certainly know what they are.
R. Waters: According to Mr. Heidrick here, he says that Central Valley
power is not available to you for one reason. That it is outside the
regions of the Central Valley project; it is their understanding. But
he has nothing definite on it.
H. Loehr: That is the other matter of putting the line up on the hill?
R. Waters : Yes.
H. Loehr: That doesn' t have anything to with this.
R. Waters: It all ties into one thing.
G. Cattan: P G & E prices are high. They are asking for. . .
R. Waters: What are we paying now?
,.._ G. Cattan: About 12 mills to Sierra Pacific,
D. Anderson: According to Heidrick' s letter, P G & E power costs about
a 10 mills.
G. Cattan: 10.6 mills. Ours costs about 12 mills, doesn' t it Tom?
T. Paulus: 11.8 and then 12; it is 12 for all practical purposes.
H. Loehr: It is not a fixed rate?
T. Paulus: No, you are billed for usage the same as with our customers.
G. Cattan: To buy from P G & E is out of the question.
R. Waters: Well, why Goerge?
G. Cattan: It is expensive; by the time you run a line you are. . .
R. Waters: Alright George, I know. In here you made the statement,
well I don' t know whether these people have the letter as of today , but
you said that we were going to forget about it. I haven' t forgotten
--- about it. I think it is a real good deal if we can get it.
G. Cattan: Not if you are going to build a line.
D. Anderson: What happens to attempting to get power off the existing
Sierra Pacific line?
G. Cattan: That is impossible.
D. Anderson: Impossible, why?
G. Cattan: Because it belongs to Sierra Pacific Power.
Page 39
SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . , page 3. . . .continued
D. Anderson: It belongs to Sierra Pacific? It belongs to the people
too. The power on the line belongs to the people, too.
G. Cattan: They are using this line to full capacity.
R. Waters: You mean we have no prior rights on it?
G. Cattan: No.
R. Waters: Why don' t we? Being a customer for the last 40 years;
we should have prior rights on it. Has anybody gone into that with
them?
G. Cattan: I have and I told you in my report they were resistant.
D Anderson: Of course they will resist it.
R. Waters: They resisted in 1967. They finally came around.
G. Cattan: You see, at the time we were talking about a 7000 KV load.
That line only carries 20,000. That is what our load will be very soon;
20,000. They purchase power and they pay for that line.
R. Waters: Well, don' t you think what we pay pays them for that line
also.
G. Cattan: It belongs to them.
R. Waters: I think we are paying for the line and the revenue we pay
them; 69% of our revenue, we must be paying them for something. There
are many things. I know your letter also stated that you estimate it
is going to cost $20,000 a mile. Is that correct.
G. Cattan P G & E. from what I understand, if they are going to sell
us power you are going to have to go to Drum. That will cost about
a million dollars. Between easements and if you can get easements, it
will take three to four years .
R. Waters: But how do you figure the estimate of $20,000 a mile? For
a 60 KVA line? How do you figure it? Where did you get your figures?
G. Cattan: I got it from Frank. That summit is very difficult. You
have to haul poles nearly by hand. You have got to have a double line.
R. Waters: I tried to get those figures out of those people yesterday
and they didn' t have them. They said they had to get them out of Reno.
Nobody had any figures that I wanted to get on the cost of a mile of
transmission line. A 60,000 kilovolt line, and they didn' t have them;
they said they came out of Reno. I wonder why they wouldn' t give them
to me if they were available.
,_.. G. Cattan: Well, there is alot of clearing. Yes, you can consider about
$20,000. And then when you got the line, you have got no way to enter
the Truckee substation.
R. Waters: I think that would be very cheap if we could retain our
facilities . Does anybody have any comment.
H. Loehr: It seems to me that in the past this thing has been thoroughly
investigated, Roy. It was always turned down. You remember the Board. . .
R. Waters: I know.
H. Loehr: The reasons haven' t changed.
Page 40
SIERRA PACIFIC POWER LEASE PROPOSAL page 4. . . . continued
R. Waters: The only reason it was turned down at that time, Mr.
Loehr, was the fact that we negotiated a very good contract with
Sierra Pacific Power Company; a five year contract, which I believe
expired last year.
H. Loehr: Well, I think you will run into similar problems.
R. Waters: According to the people I talked with yesterday, they say
the environment has alot to do with it. They say the cost of contruc-
ting lines has gone up three times because you are not allowed to cut
any trees or disturb any of the, terrain. They are still trying to
get the right of way to get their lines to Lake Tahoe. To me it would
be worth it to retain our facilities.
H. Loehr: It should be worked on a long-time basis. I don' t think
we can jump into it. Where are we going to be able to get the nec-
essary easements. I think George' s figure, going clear to Drum, I
think his figure is reasonably close.
G. Cattan: Let me get my report on the subject.
H. Loehr: You know and I know pretty well what getting over that
mountain is; where you have to go.
R. Waters: Well, I don' t think that is final. I don' t think it would
hurt to negotiate with P G & E. I think we ought to explore every
possibility before we make our decision.
H. Loehr: I think, perhaps, we ought to do it on a future basis. We
have to have time to accomplish any of these things. That is why I
am so anxcious to have the proper byback clauses in this agreement if
we go into it.
R.Waters: Obviously we can' t make any decisions on this, having just
received it today.
H. Loehr: Not today.
R. Waters: You think it should be turned over to our attorney?
H. Loehr: Yes.
R. Waters: I doubt if he would have time to study this before our
next meeting this Tuesday.
H. Loehr: He already has been given this?
R. Waters: Yes, they were forwarded to him today by mail.
H. Leohr: Was there any request made to make a report on it?
R. Waters: Oh, yes, this was at the meeting of several weeks ago. I
think Director Duane Anderson brought that up, to review everything.
D. Anderson: I don' t see a response either on our chances to force
the allowance of power to be transmitted across Sierra Pacific lines
from P G & E.
R. Waters: Well, that is a question that we will have to find out.
I would say that you will be involved in a very bitter legal battle
with the president of the administration.
N. Stone: It is a matter of waiting and they will probably resolve it
anyway. In other words, the ruling. . .
Page 41
SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . . page 5 . . . .continued
G. Cattan: Here is my report on the 60 KV line.
R. Waters: I know, George, but something must be. . .
G. Cattan: We come back to the same. . .
R. Waters: Are we going to accept this as final? Or are we going to
try. . .
G. Cattan: We are going in circles; we come back to where we started.
I mean, I gave you a report; either you turn it down or you accept it.
But we have been now since the 26th of December; we haven' t progressed
E f an inch.
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R. Waters: We haven' t had anything to progress on, George. After all,
we haven' t had the agreement of lease from the power company.
D. Anderson: It seems to me that we are talking about not two years
but life time.
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G. Cattan: Yes, that is what you people are to decide.
D. Anderson: That' s right.
G. Cattan: Whether you want to continue operating and tell Sierra
Pacific we don' t want you or. . .
D. Anderson: We are not going to make a decision in two months.
H. Loehr: I don' t think anybody is.
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N. Stone: We are going to have to decide whether to go with it or
forget about it because we have managerial problems to solve. That
will take sometime.
G. Cattan: I am not asking you to decide, I am just warning you that
you have some obligations beginning in May, 1st of May. Work that has
got to be done and the way things are now, everything is stagnant.
R. Waters: Are you saying we have problems on the first of May?
Work that has to be done. . .what do you mean by that?
G. Cattan: You have obligations to Lakeworld; the subdivders, they
want you to start constructing lines.
R. Waters: Where? What other subdividers? Other than Lakeworld?
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G. Cattan: There is Prosser Lakeview Estates, Sierra Meadows, Beaver's
subdivision.
R. Waters-, Do we have contracts with those people right now?
G. Cattan: You don' t need contracts. When they ask you to extend a
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line, you have g.ot to extend it.
H. Loehr: They have been excepted and. . .
R. Waters: I know they have been accepted.
G. Cattan-, You have obligations .
H. Loehr: We have said we will supply them with power.
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Page 42
SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . . page 6. . . . continued
R. Waters : The moment they tell us they want their line extended, we
don' t have to do it, George. Certainly, we don' t have to do it the
next day when they come around.
G. Cattan: Well, you have got to do it within two weeks, three weeks.
You can' t tell them we can' t do it because we are negotiating with
Sierra Pacific. There are materials to be ordered, poles, wires,
transformers, pad mounts . For Lakeworld, I can think of about ten
pad mounts for their condominiums . They take six months to get them.
D. Anderson: As far as I am concerned, you can continue as usual
until decision is made on Sierra Pacific lease.
G. Cattan: Well that is what, in my memorandum, I asked you for
tonight. You all got a copy of my memorandum for this special meeting.
D. Anderson: Are you talking about the one in the mail, or the one
that was here?
H. Loehr: The ors in the mail.
G. Cattan: That has been mailed three days ago. You got it, didn' t
you Nelson?
N. Stone: Yes .
G. Cattan: I said, now that purchased power from P G & E may be
rulled out, the Board has two issues for decision. To continue
operation with the high rate of increase or consider the lease agree-
ment. You want me to continue and order materials?
R. Waters: It is the wishes of the Board to continue this business
as usual and I don' t see why this lease agreement would have anything
to do with the operation of the facilities we have now. You have to
continue with the high rate of increase. To me that is. . . I don' t
like that at all. Because we are going to have that high rate of
increase whether we go with Sierra Pacific Power Company, or any
way we go. It is the same thing. It is going to be no different.
D. Anderson: The cost of power has gone up. Regardless of whether it
is P G & E or Sierra Pacific, Truckee P. U. D.
G. Cattan: Our rates are a little higher than Sierra Pacific' s. You
had that schedule I had drawn up on the rates?
R. Waters: I think we adopted an ordinance for that and we can' t change
that. I don' t know how we are going to change it. Unless we do it
by another ordinance.
G. Cattan: So I will start first of March to start ordering materials.
pow- H. Loehr: I think we will be much better to go into this at the
meeting. This seems to be the korx of the problem. Everyone will
have had a chance to go through this and make a study and we will also
have a report from Chamberlain.
R. Waters: After we will be able to study it. . .
H. Loehr: I don' t think we can do anything.
D. Anderson: That is only one side of the issue, though.
N. Stone: Do you think this is any different from what we already had?
Page 43
SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . . page 7. . . .continued
G. Cattan: No, it isn' t very different.
H. Loehr: After I have read it, I will know then.
D. Anderson: It is the alternative to this that we are failing to
investigate.
N. Stone: In order to keep the meeting going, we are going to have
to talk about something that we know something about. I think that
extension of our lines to gain P G & E power at this time is irrele-
vant to the subject. I would like to discuss the report from
Semenza, Kottinger, and McMullen. Can Tom come in?
G. Cattan: Yes.
N. Stone: From what I read in the auditors report, it appears that
the figures furnished them came from this office. I have been through
it. You gentlemen havethat report with you? On the second page, the
auditors list the operating costs at $85,000.
T. Paulus: Is that the water? I think they picked up from the pre-
vious years and allowed for growth because we didn' t furnish them
with any of that.
N. Stone: I can' t agree with that. I won' t put it on the black-
board, but let me run down through this. To pay the salary of the
Board of Directors; a water superintendent; and two girls, I don' t
agree you can get by with one; and a meter and a warehouseman, that is
a combination position; and two service and maintainance men; plus
three pickups , a backhoe, and equipment and then in operation of
street lights, water pumping, and auditors; and the manager' s pension,
I come up with a cost of $113,000 per annum to operate the water
department. This is in conflict with the figure they quote of $85,000.
So, if you will turn to the last page, no it will be on schedule two.
In the upper right hand corner, identify with schedule two. Down on
the bottom of that page, cash available for construction and equip-
ment, the auditor gives a $44,000 figure. Now, if you will revert
back to my first figure, in which I believe is the cost of operation
of the water system is some $39 ,500 more than the auditors say. And
then turn, using the auditors figures, on an annual basis there will
be $4,700 available in cash for construction and equipment. If we go
the lease route. And here now, I am making the pitch, you can' t do
anything with $4,700 in the way of maintenance and construction.
H. Loehr: Now what are you talking about? Water?
N. Stone: Water.
H. Loehr: There is alot of money available to us through land dev-
elopment. Lakeworld has got alot of money available to us. It- most
certainly will be spent on water. We also have the land sales. We
will get some more there.
R. Waters : Exclusively for the vamping of our water system.
H. Loehr: Well, that is what he is talking about: construction.
T. Paulus: Nels, let me ask you something. You don' t agree with the
second page? You have a discrepancy?
N. Stone: I don' t agree with their figures.
T. Paulus: Now, Ithink one thing you are putting in here. They are
not talking about actual cash. In other words, they are talking about
annual income and annual expenses . Down here below, you are adding
into it the new pickup and so forth.
Page 44
SIERRA PACIFIC POWER LEASE PROPOSAL page 8. . . .continued
N. Stone: Yes.
T. Paulus: Okay. You have salaries and what else do you have?
N. Stone: I have salaries and equipment.
T. Paulus: You must remember what you are looking at here is strickly
operating. It has nothing to do with the assets. You are getting
�-- the assets in there which is what the equipment will be. I am not
trying to defend it, but I think you are confusing it just a little bit.
N. Stone: Well, there may be some duplications, right. And then on
the other side, I feel there are many operation costs that I haven' t
picked up there either.
T. Paulus: These items here will be capital items and it wouldn' t
necessarily reflect on an income statment, which is merely what they
tried to project here. In other words , you would have your balance
sheet where these things would show up.
H. Loehr: They were trying to give us one answer and you are con-
fusing the total picture.
T. Paulus: Yes , I think they have realized, but I don' t think they
indicated in here that we will have to replace equipment, backhoes,
and so forth, which doesn' t necessarily show here. This is just your
income and expenses . The same thing we work up monthly for ours.
You are talking about overall cash, that is what you are trying to get
at, aren' t you?
N. Stone: Yes.
T. Paulus: They are just reflecting the operating, income and expenses .
D. Anderson: With this $44,000, this is what we would use to buy
equipment?
T. Paulus: To be honest with you, I haven' t had a chance to look this
report over. This is an application of funds, Your money coming in,
what you are going to do with it, is what your equipment would come
from.
D. Anderson: But you said you didn' t look at it very close.
T. Paulus: Well, I really didn' t. I think it essentially is very
close, because they have audited us for several years. I think they
have a pretty good picture of what we have done.
H. Loehr: We have to change the conditions now. There are so many
additional outlets .
T. Paulus: They know our growth, too. They can' t be too far off.
' D. Anderson: Never the less, what were you getting at?
N. Stone: Well, now that I have brought it down to money. . .
The representative from the Sun, Miss Radke, interrupted the meeting
momentarily to request a copy of the report from the auditors. She
was told that we could not give her a copy of it now, because the copy
machine was not working. Tom informed her that Jeanne Sollen already
had one.
Page 45
SIERRA PACIFIC POWER LEASE PROPOSAL . . , . . . . . . . . . page 9. . . . continued
N. Stone: There are a few freedoms left in this world. One of the
freedoms is to be able to express your voice in the management of
something you use.
H. Loehr: Didn' t anybody try to squelch you?
N. Stone: No.
r-- H. Loehr: You are not eminenting that you are.
N. Stone: I am wondering, for $4, 700 a year and it will probably be
less than that, whether we even want to consider a proposal like this.
D. Anderson: You mean consider a proposal from Sierra Pacific?
N. Stone: Yes. I think it is an awful high price to pay for the
loss of the opportunities to express feelings.
D. Anderson: Which is obtaining the power portion?
N. Stone: Yes.
R. Waters: Well, I think that the people will have a voice in express-
ing their feelings on this also. I don' t know whether you talked
to anybody, but you should go out in the streets and talk to some of
these people.
D. Anderson: But, before we put it to the people. . .
H. Loehr: I do, and after I start, I wish I hadn' t.
D. Anderson: Before you give it to the people to vote on, I think
we should give them all the facts and alternatives.
H. Loehr: Well, that is what we are to arrive at.
D. Anderson: The alternatives available to the District. Some
indication of what the costs will be if we retain the power.
R. Waters : That is what we are trying to do now. That is why we can' t
go on these ball park figures . How much is it going to cost to get
the power in from Central Valley, or an agreement with P G & E, or
an agreement with Sierra Pacific Power Company?
D. Anderson: We seem to be getting bits and pieces of information
which really don' t fit together.
R. Waters : We haven' t got anything concrete.
D. Anderson: Exactly, that is why I suggested at the last meeting
that perhaps we need to get professional help to assist us in doing a
r-- feasability study as to what direction we should go; what the alter-
natives are. What the ramifications are and what the costs are.
G. Cattan: I don' t think you can afford. . .we gave you all the infor-
mation.
D. Anderson: I don' t think we can afford not to, George.
R. Waters: I think we are going to have to do something one way or
another.
Page 46
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SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . page 11. . . . continued
D. Anderson: How about power off Sierra Pacific' s line?
T. Paulus : I don' t know about that, I am just looking at that one
thing where we are talking of an alternate.
D. Anderson: Martin McDonough suggests that a ruling sometime in the
future would be beneficial to the District in the future, just th
aspect.
._..
R. Waters: Mr. McDonough did say very recently that there wasn' t
any possibility or change on the Federal Power Commissions ruling.
D. Anderson: Saying that there was no possibility of a. . .
R. Waters: He said chances are remote. Any change in the Federal
Power Commissions ruling.
D. Anderson: Of getting any power off Sierra Pacific ' s lines?
R. Waters : No, of reducing costs of power.
D. Anderson: Oh, I know. But still there is a set of lines that
pass right through Truckee. Why construct another set?
H. Loehr: Because those are Sierra Pacific' s lines.
D. Anderson: But the power generated is. . .
G. Cattan: They are paying for these lines $160,000 per month to
PG & E.
D. Anderson: Perhaps we should pay a portion of this cost. That
is still public power going over that line.
T. Paulus: Well, here again, you are not going to get much difference
in rate. As I say, we are already paying 12, assuming we could get
this for 10, almost 11, it really doesn' t compensate the amount of
money you have invested.
D. Anderson: But then on the other hand, you will be retaining our
system which is an advantage. Some people, if we are going to be
paying the same price, would just as soon retain the power. Our
idea is we lease the District if it is going to cost us more to deliv-
er- power to the people than Sierra Pacific. It will be an advantage
to the people to have it in the hands of Sierra Pacific.
T. Paulus: Well, you saw the chart. I don' t know when it was pre-
pared. I guess about a month ago. After we raised the rates in
February, we will be 25% higher than Sierra Pacific which surrounds
US.
D. Anderson: That is our problem because we are buying power from
Sierra Pacific.
H. Loehr: Does their rate increase take effect very shortly?
T. Paulus: They have applied for it but I don' t know: how long before
it will take effect.
G. Cattan: In my report. . .
H. Loehr: How can they pass it onto us if the other rate hasn' t
taken effect?
R. Waters: Well, there will always be a refund.
Page 48
SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . page 12. . . .continued
T. Paulus: I think he is talking about the people' s rates .
G. Cattan: I said in my previous report, January 16, I said the
existing tie lines were sponsored by and constructed for the benefit
of Sierra Pacific Power Company. The tie lines consist of a 60 KV
and a 120 KV line which Sierra Pacific Power Company considers com-
mitted to them and will resist the use of these power lines by P G & E
to transmit power to Truckee-Donner P.U.D. These are legal matters
r- not a question of give it to somebody to study. If Sierra Pacific
says they don' t want you to use these lines, you have to fight them in
court. And that is a legal matter.
R. Waters: Well, have we discussed with our attorney the possibility
of getting it. of how much it will cost, and the time it will take?
We haven' t done that.
G. Cattan: I understood from Sierra Pacific they are paying $165 ,000
per month for use of those 120 and 60 kilovolt lines.
R. Waters: Per month?
D. Anderson: For the use? Who are they paying?
T. Paulus: P G & E.
G. Cattan: Yes , they are paying P G & E.
D. Anderson: P G & E owns the lines?
G. Cattan: No, but they pay.
D. .Anderson: Well then why are they paying if they own the lines.
G. Cattan: If you want me, I will ask Martin McDonough to take the
matter up with Sierra Pacific.
D. Anderson: That is kind of what we have been asking for all night
lone. I am glad you got the point.
G. Cattan: Because I think it is useless. You are only wasting your
time. We can' t afford to spend clot of money just at the moment. We
have had alot of expense so far.
R. Waters: What are the reasons for bringing this out then? The cost
will be at the expense of the District.
T. Paulus: Nets, can you open that Semenza thing and let' s talk
about it a second as long as we are sort of generalizing.
G. Cattan: I will bring everything together and put them in a folder
and will see that I have deli with every subject.
R. Waters: Well, I think it is the thought of some of the people of
the Board would like to have an outside consultant to look at this.
G. Cattan: How are you going to pay them?
R. Waters: Well, after all, Mr. Cattan, we have a 25% rate increase
coming up this next month, don' t we?
G. Cattan: That will just about meet your bills to Sierra Pacific.
We haven' t paid their bill for the last month.
R. Waters: Well, how have we done this in the past?
Page 49
SIERRA PACIFIC POWER LEASE PROPOSAL page 13. . . .continued
T. Paulus: Roy, we have never had this- problem in the past, quite
frankly. We have never had to pay 70 cents out of every dollar for
power. This is something that has just hit us .
R. Waters: The increase is going to take care of that, isn' t it?
T. Paulus: The 25%? No, we mentioned at the time, that it would
keep us operating possibly until the spring. But it isn' t going to
show the comfortable profit that is has. We really can' t tell, though.
R. Waters: Actually, we haven' t had a profit for years and years, have
we?
T. Paulus: We have always had a profit but we have reinvested it in
various things. Now we are not going to have the profit so that we
can reinvest. We will have to see when February comes how it is going
to come out.
R. Waters: I think that might help us, because nobody knows how
much we are going to have to spend.
T. Paulus: The only thing you can do is make an educated guess until
all the billings are in but I don' t think it is going to keep our
heads above water.
D. Anderson: How much money do we have in land sales?
T. Paulus: We took $18,000 out of it and I think there is $160,000.
But it doesn' t mature until September. We put it in for a year so
POMM if we take it out now, we loose the interest on it. We have some
construction money from Lakeworld that we can tap if we absolutely
have to.
G. Cattan: Also, you have got an increase in April for the men.
Labor. That amounts to quite a bit.
R. Waters: Well, I think that can be negotiated. I don' t think we
have to worry about that now. Everything is retroactive to April 1.
G. Cattan: Materials go up, everything goes up. Nothing is going down.
D. Anderson: What alternatives are we going to have with the raised
rates? Even water rates. Which we haven' t touched.
G. Cattan: They did raise the water rates a few years ago.
H. Loehr: Do you want to leave town? Just raise the water. We have
a pretty high water rate right now.
T. Paulus: Duane, I think you have to look at it, I am not trying to
sell it one way or the other, but I think we all know we are surrounded
•--- by a competitor whocan and is delivering power to the surrounding
people cheaper. I know you used to live in Kings Beach, you got
cheaper power than we do. When the February increase goes in, we will
be charging approximately 25% higher than Sierra Pacific. Now if the
people want to retain it, and pay that 25%, fine.
R. Waters: Well eventually they are going to have to pay that 25%
to the power company, aren' t they?
T. Paulus: I would imagine eventually they will but it will be
several years before it catches up to itself.
G. Cattan: No.
Page 50
SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . page 14. . . . continued
R. Waters: You say that they are not going to have to pay that 25%,
George? It is not going to be passed on to the consumers?
G. Cattan: If Sierra Pacific takes over, their rates will apply to
the people.
R. Waters : For one year.
G. Cattan: For all California it is the same. It is not Truckee;
Truckee is nothing special.
T. Paulus: Roy, five or six years from now, they may be paying 25%
higher for power or maybe before then. But right now. . .
R. Waters: In other words, you people are telling me that this rate
increase only applies to this District? It doesn' t apply to their
facilities at North Tahoe?
T. Paulus: No, I am saying that we raised our rates in February,
as you know, which makes us approximately 25% higher than the other
consumers.
R. Waters: They have a rate increase coming from their other consumers,
outside of our District.
T. Paulus: Theirs is I believe 6. 2. Eventually theirs will. That
is what I am saying; it will be over a period of five or six years .
R. Waters: I think it is within this year. It is the same.
r—�
T. Paulus : I don' t think it will be 25% in one year.
R. Waters: Why would they discriminage against this District and
charge us 25% more than they do their other customers at North Tahoe,
South Tahoe.
T. Paulus : No they are not, they are going to apply the same rate to
everyone. That is what I am saying, essentially, they are supplying
cheaper power to the consumers around us and they will be here, if
they get their lease. This is my point, how long are the people going
to pay higher rates to keep it? If they want it, fine. I am not
trying to sell you on it, I am just trying to point something out that
I don' t think everyone is aware of until about February when they start
getting their power bill.
H. Loehr: Are you going to increase our life insurance, too. When
this rate takes effect, everybody wants to kill us .
T. Paulus: Our hands are tied.
H. Loehr: Well, at lease we can get insurance.
T. Paulus: We went to Washington and lost our case. There is nothing
we can do.
H. Loehr: I know. We are going to have an unhealthy time for awhile,
I think.
R. Waters: Well, there is no way of cutting expenses to bring that
increase down?
T. Paulus: Well, we are operating on a skeleton crew right now,
really. We are going to have to add a couple of people, at least, in
the early spring.
G. Cattan: You all had the rate comparison study that was submitted
to you January 22? This shows the difference in percentage. page 51
SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . page 15 . . . .continued
R. Waters: I have a copy of that.
N. Stone: That temporary increase in rates doesn' t bother me a bit
because for 42 years or something we have been way under in rates in
comparison to Sierra Pacific' s . Why in the hell can' t we live with
it for a couple months until we get. . .
T. Paulus: We can' t live with it.
R. Waters: Well, I don' t see where we are going to get -by with a
couple of months. It is going to be a permanent increase, as far
as I can see.
T. Paulus: Remember when we put this in, we said we can keep our heads
above water, we will try it and see what we can do. There is no way
of knowing until the figures come in. But I doubt very seriously if
we are going to revert back to a lower rate.
R. Waters: There is no way that it will ever do it.
G. Cattan: When Sierra Pacific raised their rates because of the. . .
I sent you a copy, P G & E are raising their rates 22% and this will
be reflected on our bill after April of 6%. It can be reflected on
all Sierra Pacific power consumers in California. This is 6%. That
means we will always be higher than Sierra Pacific; our rates will;
the rates that we now have inforced.
D. Anderson: Not always. This could be a catching up period. It
has finally caught up to us. It could be this way for the next
several years. Maybe we could fall under Sierra Pacific rates next
r
time they ask for an increase at the Lake or anywhere in this area.
G. Cattan: Rates never go down.
D. Anderson: I am not saying they are going down; I am saying if
Sierra Pacific goes up, ours could stay down.
G. Cattan: When there' s go up, ours go up.
H. Loehr: I don' t think we are getting anywhere. Just take these
home and study them.
N. Stone: How much did this auditors report cost?
T. Paulus: We haven' t got the bill yet.
N. Stone: Have you got a guess?
G. Cattan: Four or five hundred.
T. Paulus: I imagine it is around there somewhere. It shouldn' t be
,,..., too much.
N. Stone: You got any idea of how much it will cost to have somebody
come in here and shake this place down and work up a report like
Duane was talking about to tell us if this is or isn' t the way to
go. Are we talking of, what, $2,000?
G. Cattan: You are talking of many more.
R. Waters: Let' s find out. Let' s go to somebody and talk to somebody.
G. Cattan: We have our consultants already. We have Martin McDonough
and we have our electrical engineer, which I sent you a copy of our rates.
Page 52
SIERRA PACIFIC POWER LEASE PROPOSAL page 16. . . .continued
H. Loehr: Is there going to be any official action taken tonight?
I would like to be excused if I can. I don't feel too good.
G. Cattan: I think our discussion. . .
R. Waters : No, you are excussed.
H. Loehr: Thank you.
r-•
R. Waters: Will you please study that and be prepared for the next
meeting?
H. Loehr: Yes, we will be acting on it Tuesday, is that right?
Okay, I am sorry I can' t stick around.
G. Cattan: I have sent a copy of this to Paul Chamberlain. I am
sending one to our auditors.
R. Waters: So, shall we persue this consultant.
D'. Anderson: I believe so. I am not quite sure what kind of con-
sultant to get. A financial consultant? Onesummer there was one
doing work for the Tahoe Truckee Sanitation Agency, Laurel Wells,
Maybe Chamberlain could give us a suggestion.
R. Waters: We want the cost of building a line ourselves or whether
we are legally entitled to power from Sierra Pacific Power Company
or whether we are legally entitled to power from the Central Valley
project.
D. Anderson: It is going to be a combination of some people.
G. Cattan: But, you have them already.
D. Anderson: In one report.
R. Waters: Something we can present to the people.
G. Cattan: You already have Martin McDonough and you have another
ore that is acquainted with _all this.
N. Stone: Why don' t you ask Heidrick' s outfit what it will cost.
G. Cattan: To get a new one it will cost ten to twenty thousand
dollars. They could make a big story out of it. They are all acquainted
with all the papers, all the documents , and legality.
R. Waters: We would like to know how much it is going to cost. That
is what we want to know. That is the only thing we want to know.
G. Cattan: Well it is only to contact McDonough and Heidrick again.
N. Stone: See, George, there are things in here that I don' t think
we are qualified. Like Heidrick says already that Sierra Pacific
Power Company is making 8% off of this District. And for sure they
aren' t going to enter into this contract if we went that way for less
than 8% so there is 16% and then in addition to that 16% they are
making off us already, they are tacking on another 36% extra charge
for fuel, which domes out to be a, I figure, 22% profit off the power
they are selling to this District. All these figures have to be put
in proper prospective so we can understand what is going on before
we can make a decision. But I agree with you that if this is going
to cost alot of money, we are going to have to really think it out.
All we are asking now is for you to get some quesstimate from those
guys of what a study will cost.
Page 53
SIERRA PACIFIC POWER LEASE PROPOSAL . . . . . . . . . . . page 17. . . .continued
R. Waters: We would like to have an honest appraisal and not some
ball park figure. That is all we ask.
G. Cattan: This is what you have. The people do not understand
what we have been doing for the last two months . The public won' t
know where to start on it.
R. Waters : That is what we want you to do.
f G. Cattan: The Board has to make the decision.
R. Waters: We realize that.
G. Cattan: The Board has to present it to the people. If you think
it is not workable you just. . .
D. Anderson: Does this take a minute order? It certainly doesn' t
take a motion to direct the manager to inquire into the costs of. . .
G. Cattan: No, it doesn' t need a minute order; it is already in the
minutes. I will contact McDonough and Heidrick.
R. Waters: And if there is a firm that engages in that. . .
G. Cattan: They already know 99% of the figures.
D. Anderson: Oh, it shouldn' t cost too much.
G. Cattan: No, but you get somebody from outside and it is going
to cost alot of money.
R. Waters: Well, let' s try and find out how much it is going to
cost. That is all we want to know.
N. Stone: It might cost less than it would an election. I think we
need to know first before the people know so that we can advise them.
G. Cattan: I will pass him the documents and send reports.
R. Waters : Do we have any further discussion? I believe Mr. Sutton
would like to say something. It is highly irregular but we welcome
you people here and taking an interest in the District. At least we
have three people that are interested in the District.
R. Sutton: Do you have that proposal now from Sierra Pacific? We
have an agreement of lease proposal?
R. Waters: We just received it today.
R. Sutton: I would think that the request for further study, one
that would compare, down the line all the alternatives in the same
form that you have from Sieera Pacific so that it will be easy to
follow by you and by the voters .
R. Waters: That is exactly what we want.
R. Sutton: The reason I bring it up is if your consultant isn' t
aware of what else is available, you are going to come up with a
study that isn' t comparible to what you know now from Sierra Pacific.
It is going to be one that you and I can' t compare,
is n n n non n��n
Page 54
There being no further discussion on the matter and nothing else
to come before the Board, D. Anderson moved that the meeting be
adjourned. Director Stone seconded the motion. All aye; motion
carried.
The meeting was adjourned by President, Roy Waters, at 8:29 p. m.
Roy Waters, I
sident of the Board
Merril n Hick , Recording Secretary
Page 55